PES Institute of Technology, Bangalore South Campus

(Formerly PES School of Engineering) (Hosur Road, 1KM before Electronic City, Bangalore-560 100)

Dept of MCA

INTERNAL TEST (SCHEME AND SOLUTION) – T1

Subject Name: Enterprise Resource Planning

Subject Code: (13MCA455)

1.Differentiate business functions and business processes and also discuss in detail about

the creation of integrated Data model in ERP projects (10 Marks)

ERP improves business processes and the use of information across an organization by integrating functions such as finance, order management and purchasing into a set of interconnected modules. ERP applications automate and support a range of administrative and operational business processes across multiple industries, including line of business, customer-facing, administrative and the asset management aspects of an enterprise. However, ERP deployments tend to come at a significant price, and the business benefits are difficult to justify and understand. Look for business benefits in four areas: IT cost savings, business process efficiency, as a business process platform for process standardization and as a catalyst for business innovation. Most enterprises focus on the first two areas, because they are the easiest to quantify; however, the latter two areas often have the most significant impact on the enterprise. Factors to be considered:-

Before beginning an ERP project, consider the following potential obstacles, and prepare strategies to overcome them:

Develop a strategy statement for the ERP project. This project will likely be larger than any individual business case or project, and will need executive sponsorship.

Build a business case for IT cost savings, including retiring legacy applications, reducing integration costs and consolidating skills.

Build a business case for business efficiencies. Ensure that you are deploying the right components of ERP that will support these business needs.

Focus on process standardization as a basis for process innovation and differentiation. Set expectations realistically. Remember, ERP won’t solve all your issues with integration and data.

Create a sound ERP strategy. You’ll need to build a strategy that integrates your ERP vendor’s capabilities with your business and technology needs.

Conduct your ERP project in five phases Gartner recommends that IT leaders follow five major phases when considering ERP (these phases may vary, depending on your organization, the extent of your interest in ERP and your enterprise’s needs as they relate to the multiple functions involved in a successful ERP implementation. Strategize and plan: Draft a charter to gain agreement on the vision and mandate behind the project, in alignment with business goals. Scope the project, and establish resources, budget and governance systems. Integrate the project with strategic IT and business plans. Architect solution: Define the architecture, technology and standards for the project. Model business requirements and detail specifications for solution delivery. Recommend how to implement the project. Define process detail and performance metrics. Communicate the plan. Select solution: Set requirements and issue RFPs. Analyze market intelligence. Evaluate vendor/ service provider options. Choose technologies and vendors/service providers. Negotiate service service-level agreements and contracts. Deploy: Staff and manage the implementation. Coordinate solution deployment. Create the development and test environment, and run tests. Seek feedback from users. Monitor risks. Operate and evolve: Operate and manage the implementation. Revise in response to feedback, risks and changing business requirements. Measure performance. Monitor use and compliance. Develop skills and define best practices for users. Refine governance processes 2. Define ERP and Discuss the Benefits of ERP (10Marks)

ERP is short for enterprise resource planning.

Enterprise resource planning (ERP) is business process management software that allows an

organization to use a system of integrated applications to manage the business and automate

many back office functions related to technology, services and human resources. ERP software

integrates all facets of an operation, including product planning, development, manufacturing,

sales and marketing.

Benefits of ERP software are:

i. Scalability: An ERP system is easily scalable. That means adding new functionality to

the system as the business needs change is easy. This could mean easy management of

new processes, departments, and more.

ii. Improved reporting: Much of the inefficiency in operational work stems from improper

reporting. With an ERP system, this possibility is eliminated as reporting follows an

automated template system, allowing various departments to access information

seamlessly.

iii. Data quality: As compared with manual record-keeping or other traditional approaches,

an ERP system improves data quality by improving the underlying processes. As a result,

better business decisions can be reached.

iv. Lower cost of operations: An ERP system introduces fundamental innovations in

managing resources, which eliminates delays and thus reduces cost of operations. For

instance, use of mobility allows real-time collection of data, which is indispensable to

lowering costs.

v. Better CRM: A direct benefit of using a good ERP system is improved customer

relations as a result of better business processes.

vi. Business analytics: Having high-quality data allows businesses to use the power of

intelligent analytics tools to arrive at better business decisions. In fact, many good ERP

systems have built-in analytics functionality to allow easier data analysis.

vii. Improved data access: Controlling data access properly is always a challenge in

organizations. With an ERP system, this challenge is overcome with the use of advanced

user management and access control.

viii. Better supply chain: Having the right ERP system in place means improved

procurement, inventory, demand forecasting, etc., essentially improving the entire supply

chain and making it more responsive.

3. Discuss in detail about the risks of ERP and its implementation issues (10 Marks) Organizations face several new business risks when they migrate to real-time, integrated ERP systems. Those risks include: • Single point of failure : Since all the organization’ data and transaction processing is within one application system and transaction processing is within one application system. Structural changes significant personnel and organizational structures changes associates with reengineering or redesigning business processes. • Job role changes : transition of traditional user’s roles to empowered-based roles with much greater access to enterprises information in real time. • Online, real-time : An online real-time system environments requires a continuous business environment capable of utilizing the new capabilites of the ERP application and responding quickly to any problem requiring of re-entry of information. • Change management: It is challenging to embrace a tightly integrated environment when different business processes have existed among business units for so long. The level of user acceptance of the system has a significant influence on its success. Users must understand that their actions or inaction have a direct impact upon other users and, therefore, must learn to be more diligent and efficient in the performance of their day-today duties. Considerable training is therefore required for what is typically a large number of users. • Distributed computing experience : Inexperience with implementing and managing distributed computing technology may pose significant challenges. • Broad system access : Increased remote access by users and outsiders and high integration among application functions allow increased access to application and data.

• Dependency on external assistance : Organization accustomed to inhouse legacy systems may find they have to rely on external help. Unless such external assistance is properly managed, it could introduce an element of security and resource management risk that may expose the organizations to greater risk. • Program interfaces and data conversions : Extensive interfaces and data conversions from legacy systems and other commercial software are often necessary. The exposures of data integrity, security and capacity requirements for ERP are therefore often much higher. • Audit expertise : Specialist expertise is required to effectively audit and control an ERP environment. The relative complexity of ERP systems has created specialisation such that each specialist may know only a relatively small fraction of the entire ERP’s functionality in a particular core module

4.Define the term BPR and Discuss different phases of BPR along with 5 keys to a

successful Redesign (10 Marks)

BPR is the fundamental rethinking and radical redesign of processes to achieve dramatic

improvement, in critical, contemporary measures of performance such as cost, quality, service

and speed.

Phases of BPR

•Begin Organizational Change

•Building the Reengineering Organization

•Identifying BPR Opportunities

•Understanding the Existing Process

•Reengineering the Process

•Blueprint the New Business System

•Perform the Transformation

5.What do you mean by data warehouse.Discuss the types of data stored and explain its

architecture and advantages in detail. (10Marks)

Data warehouse is a collection of data to support the management decision making.It generally

refers to combination of many different databases across an entire enterprise.

The primary goals of a data warehouse are following

i. Provide access to the data of an organization

ii. Data consistency

iii. Capacity to separate and combine data

iv. Inclusion of tools setup to query , analysis and present information

v. Publish used data

vi. Drive business reengineering Uses of a data warehouse:

i. Standard reports and queries ii. Queries against summarized data

iii. Data Mining

iv. Interface with other data warehouses

Three-Tier Data Warehouse Architecture

Generally a data warehouses adopts a three-tier architecture. Following are the three tiers of the

data warehouse architecture.

Bottom Tier - The bottom tier of the architecture is the data warehouse database server. It

is the relational database system. We use the back end tools and utilities to feed data into

the bottom tier. These back end tools and utilities perform the Extract, Clean, Load, and

refresh functions.

Middle Tier - In the middle tier, we have the OLAP Server that can be implemented in either

of the following ways.

o By Relational OLAP (ROLAP), which is an extended relational database

management system. The ROLAP maps the operations on multidimensional data to

standard relational operations.

o By Multidimensional OLAP (MOLAP) model, which directly implements the

multidimensional data and operations.

Top-Tier - This tier is the front-end client layer. This layer holds the query tools and

reporting tools, analysis tools and data mining tools.

The following diagram depicts the three-tier architecture of data warehouse:

6.What is Data Mining? Explain its evolution and models with its advantages in detail

(10 Marks)

Data mining or knowledge discovery, is the computer-assisted process of digging through and

analyzing enormous sets of data and then extracting the meaning of the data. Data mining tools

predict behaviors and future trends, allowing businesses to make proactive, knowledge-driven

decisions.

Evolutionary Step Business Question Enabling Technology

Data Collection (1960s)

"What was my total

revenue in the last five

years?"

computers, tapes, disks

Data Access (1980s)

"What were unit sales

in New England last

March?"

faster and cheaper computers with more storage,

relational databases

Data Warehousing and

Decision Support

"What were unit sales

in New England last

March? Drill down to

Boston."

faster and cheaper computers with more storage,

On-line analytical processing

(OLAP), multidimensional databases, data

warehouses

Data Mining

"What's likely to

happen to Boston unit

sales next month?

Why?"

faster and cheaper computers with more storage,

advanced computer algorithms

7. Define the term OLAP and Discuss its key features and Different styles

of OLAP(10 Marks)

OLAP is an acronym for Online Analytical Processing. OLAP performs multidimensional analysis of business data and provides the capability for complex calculations, trend analysis, and sophisticated data modeling.

Features of OLAP:

There are the following key features of OLAP:

• Multi-dimensional views of data

• Support for complex calculations

• Time intelligence

In the OLAP world, there are mainly two different types: Multidimensional OLAP (MOLAP)

and Relational OLAP (ROLAP). Hybrid OLAP (HOLAP) refers to technologies that combine

MOLAP and ROLAP.

MOLAP

This is the more traditional way of OLAP analysis. In MOLAP, data is stored in a

multidimensional cube. The storage is not in the relational database, but in proprietary formats.

Advantages:

Excellent performance: MOLAP cubes are built for fast data retrieval, and are optimal for

slicing and dicing operations.

Can perform complex calculations: All calculations have been pre-generated when the

cube is created. Hence, complex calculations are not only doable, but they return quickly.

Disadvantages:

Limited in the amount of data it can handle: Because all calculations are performed when

the cube is built, it is not possible to include a large amount of data in the cube itself. This

is not to say that the data in the cube cannot be derived from a large amount of data.

Indeed, this is possible. But in this case, only summary-level information will be included

in the cube itself.

Requires additional investment: Cube technology are often proprietary and do not already

exist in the organization. Therefore, to adopt MOLAP technology, chances are additional

investments in human and capital resources are needed.

ROLAP

This methodology relies on manipulating the data stored in the relational database to give the

appearance of traditional OLAP's slicing and dicing functionality. In essence, each action of

slicing and dicing is equivalent to adding a "WHERE" clause in the SQL statement.

Advantages:

Can handle large amounts of data: The data size limitation of ROLAP technology is the

limitation on data size of the underlying relational database. In other words, ROLAP

itself places no limitation on data amount.

Can leverage functionalities inherent in the relational database: Often, relational database

already comes with a host of functionalities. ROLAP technologies, since they sit on top

of the relational database, can therefore leverage these functionalities.

Disadvantages:

Performance can be slow: Because each ROLAP report is essentially a SQL query (or

multiple SQL queries) in the relational database, the query time can be long if the

underlying data size is large.

Limited by SQL functionalities: Because ROLAP technology mainly relies on generating

SQL statements to query the relational database, and SQL statements do not fit all needs

(for example, it is difficult to perform complex calculations using SQL), ROLAP

technologies are therefore traditionally limited by what SQL can do. ROLAP vendors

have mitigated this risk by building into the tool out-of-the-box complex functions as

well as the ability to allow users to define their own functions.

HOLAP

HOLAP technologies attempt to combine the advantages of MOLAP and ROLAP. For

summary-type information, HOLAP leverages cube technology for faster performance. When

detail information is needed, HOLAP can "drill through" from the cube into the underlying

relational data.

8. Discuss in detail the evolution and improvement in the Supply Chain Management with its

advantages (10 Marks)

SCM assists the business organization to compete in the dynamic international market. The objective of SCM- is to incorporate activities across and within organizations for providing the customer value. This should also be applicable to the academia, which represents a type of non-profit organizations. The goal is to provide the society value by producing high quality graduates and research outcomes. An integrated educational supply chain involves

coordination and information sharing up and down the process among all stakeholders. SCM is needed for various reasons: improving operations, better outsourcing, increasing profits, enhancing customer satisfaction, generating quality outcomes, tackling competitive pressures, increasing globalization, increasing importance of E-commerce, and growing complexity of supply chains . Supply chains are relatively easy to define for manufacturing industries, where each participant in the chain receives inputs from a set of suppliers, processes those inputs, and delivers them to a different set of customers

SCM involves management of flows of products, information, and finance upstream and downstream in the supply chain. In the course of time, the most considerable benefits to businesses with advanced SCM capabilities will be radically improved customer responsiveness, developed customer service and satisfaction, increased flexibility for changing market conditions, improved customer retention and more effective marketing SCM is a concept, “whose primary objective is to integrate and manage the sourcing, flow, and control of materials using a total systems perspective across multiple functions and multiple tiers of suppliers” . Stevens (1989) stated the objective of SCM was to synchronize the customers’ requirements with materials flow to strike a balance among conflicting goals of maximum customer service, minimum inventory management, and low unit costs. The supply chain is viewed as a single process. Responsibility for the different divisions in the chain is not fragmented and transferred to functional areas such as manufacturing, purchasing, distribution, and sales. SCM calls for, and in the end depends on, strategic decision-making. “Supply” is a shared objective of practically every function in the chain

and is of particular strategic importance because of its impact on overall costs, profits and market share.

Supply chain management (SCM) is a broadened management focus that considers the combined impact of all the companies involved in the production of goods and services, from suppliers to manufacturers to wholesalers to retailers to final consumers and beyond to disposal and recycling. This approach to managing production and logistics networks assumes all companies involved in the process of delivering goods to consumers are part of a network, pipeline, or supply chain. It encompasses everything required to satisfy customers and includes determining which products they will buy, how to produce them, and how to deliver them. The supply chain philosophy ensures that customers receive the right products at the right time at an acceptable price and at the desired location.

Increasing competition, complexity, and geographical scope in the business world have led to this broadened scope and continuing improvements in the capabilities of the personal computer have made the optimization of supply chain performance possible. Electronic mail and the Internet have revolutionized communication and data exchange, facilitating the necessary flow of information between the companies in the supply chain.

Companies that practice supply chain management report significant cost and cycle time reductions. For example, Wal-Mart Stores Inc. announced increases in inventory turns, decreases in out-of-stock occurrences, and a replenishment cycle that has moved from weeks to days to hours.

A fundamental premise of supply chain management is to view the network of facilities, processes, and people that procure raw materials, transform them into products, and ultimately distribute them to the customer as an integrated chain, rather than a group of separate, but somewhat interrelated, tasks. The importance of this integration cannot be overstated because the links of the chain are the key to achieving the goal. Every company has a supply chain, but not every company manages their supply chain for strategic advantage.

While easy to understand in theory, the chain management becomes more complex the larger the company and its range of products, and the more international the locations of its suppliers, customers, and distribution facilities. Supply chain management is also complex because companies may be part of several pipelines at the same time. A manufacturer of synthetic rubber, for example, can at the same time be part of the supply chains for tires, mechanical goods, industrial products, shoe materials and footwear, aircraft parts, and rubberized textiles.

INFORMATION FLOW

Another requirement is increased information flow. Companies must invest in the technology

that will provide access to greater amounts of timely information. Information makes it possible

to move to more instantaneous merchandise replenishment and allow all parties in the chain to

respond quickly to all changes. Information facilitates the decisions of the supply chain such as

evaluation and exploration of alternatives. Information flow is key to the visibility of the product

as it flows through the supply chain and is needed at every stage of he customer order. Improving

the intelligence of where products are in the chain also improves inventory management and

customer service capabilities. Issues of trust and security are fundamental to information

integration. Many organizations are successfully dealing with these issues through the

development of partnering relationships.

ACHIEVING THE GOALS OF SUPPLY

CHAIN MANAGEMENT

Methods being used to achieve the goals of supply chain management can be divided into two

categories. Some methods seek to achieve the goals through improving the processes within the

links of the chain. There are also methods that seek to achieve the goals by changing the roles or

functions of the chain.

The methods used to improve the process include modeling various alternatives, effective

measurement, improved forecasting, designing for the supply chain, cross-docking inventories,

direct store delivery, and electronic data interchange (EDI) technology. Direct store delivery

methods bypass the distribution center. Products using direct store delivery include bakeries,

cosmetics, snack foods, and other items where product freshness or quick replenishment is

required. Cross-docking is a process that keeps products from coming to rest as inventory in a

distribution center. Products arrive at the center and are immediately off loaded, moved, and

immediately reloaded on waiting delivery trucks.

EDI technology is the electronic exchange of information between the computer systems of two

or more companies. It is used to process transactions like order entry, order confirmation, order

changes, invoicing, and pre-shipment notices. The EDI movement was started by big retailers

like Wal-Mart, Kmart, and Target. To do business with some of these large customers, EDI

processing is a requirement. EDI delivers results by facilitating the constant and rapid exchange

of information between companies. Customer order, invoice, and other information that would

previously require hours of data entry can be done in minutes. Point of sale data can be

transmitted in a matter of minutes or hours instead of weeks.

Methods that use changing roles include postponement strategies, vendor managed inventory,

and supplier integration. Postponement strategies delay the differentiation of products in order to

gain flexibility to respond to changing customer needs. Product inventory is held in a generic

form so that as specific demand becomes known, the product can be finished and shipped in a

timely manner. Vendor managed inventory and continuous replenishment programs are ways in

which organizations are reaching beyond their boundaries and integrating their efforts with

suppliers and customers. Point of sale data is transferred from customer to supplier in real time

so that automatic replenishments can occur. Companies can even surrender the responsibility for

managing inventory to some of their suppliers. Supplier integration moves beyond partnering

with suppliers and focuses on aligning with all critical suppliers the supply chain.